Exhibit 4.16


 


AGENCY AGREEMENT


 


	
  June 15, 2004

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ADB Systems International Ltd.

  	
   

  	
   

  
	
  6725 Airport Road, Suite 201

  	
   

  	
   

  
	
  Mississauga, Ontario  L4V 1V2

  	
   

  	
   

  
	
   

  
	
  Attention:

  	
  Jeffrey
  Lymburner

  
	
   

  	
  Chief
  Executive Officer

  
				



 


Dear Sirs/Mesdames:


 


First Associates Investments Inc. (the “Agent”)
understands that ADB Systems International Ltd. (the “Company”) desires to issue and
sell, in one or more closings, up to $5,000,000 principal amount of convertible
notes (the “Convertible
Notes”) of the Company (the “Offering”), having the terms
described in Schedule “A” to this agreement.


 


The Company hereby appoints the Agent, and
the Agent hereby agrees to act, as the Company’s exclusive agent in respect of
the Offering to use its best efforts to offer for sale and obtain subscriptions
for the Convertible Notes in the Qualifying Provinces in accordance with
applicable Securities Laws; provided that the Agent will be under no obligation
to purchase any of the Convertible Notes.


 


In consideration of the Agent’s services to
be rendered in connection with the Offering, including (i) assisting in
preparing documentation relating to the sale of the Convertible Notes; (ii)
distributing the Convertible Notes, both directly and indirectly; (iii)
performing administrative work in connection with the Offering; and (iv) all
other services arising out of this agreement, the Company agrees to pay the
Agency Fee (as hereinafter defined), and to issue the Compensation Options (as
hereinafter defined) to the Agent at the Time of Closing.


 


The Company agrees that the Agent will be
permitted to appoint other registered dealers (or other dealers duly qualified
in their respective jurisdictions) as their agents to assist in the Offering
and that the Agent may determine the remuneration payable to such other dealers
appointed by them, such remuneration to be payable by the Agent.


 


This offer is conditional upon and subject to
the additional terms and conditions set forth below.


 


1.                                      Interpretation


 


1.1                                 Unless expressly provided otherwise, where used in this agreement or
any schedule hereto, the following terms shall have the following
meanings, respectively:


 


“Agency Fee” means the commission
payable to the Agent;


 

















 


(a)                                  in respect of Protected List Purchases, 4% of the proceeds of the
Protected List Purchases; and


 


(b)                                 in respect of all other purchases, excluding Protected List
Purchases, 8% of the remaining aggregate proceeds of the Offering;


 


“Agent” shall have the meaning
ascribed thereto in the first paragraph of this agreement;


 


“Applicable Securities Laws”
means, collectively, the applicable securities laws of each of the Qualifying
Provinces and the securities legislation of each other relevant jurisdiction
and the respective regulations and rules made and forms prescribed thereunder
together with all applicable published policy statements and blanket orders and
rulings of the Securities Commissions and each other relevant securities
regulatory authority;


 


“Business Day” means a day other
than a Saturday, Sunday or statutory or banking holiday in the Province of
Ontario;


 


“CCRA” means the Canada Customs
and Revenue Agency;


 


“Closing Date” means the date on
which the Offering is to be completed, as specified in Schedule “A” to
this agreement;


 


“Common Shares” means the common
shares in the capital of the Company;


 


“Company” shall have the meaning
ascribed thereto in the first paragraph of this agreement;


 


“Company’s Information Record”
means any statement contained in any press release, material change report,
financial statements, annual information form, annual or interim report, proxy
circular or other document of the Company which has been or is publicly
disseminated by or with the consent of the Company, whether pursuant to any
Applicable Securities Laws or otherwise;


 


“Compensation Options” means the
compensation options (each a “Compensation Option”) of the Company to
purchase Compensation Units issued to the Agent as follows:


 


(a)                                  such number of Compensation Units as is equal to 5.0% of the number
of Units issuable upon full conversion of the Convertible Notes sold as
Protected List Purchases; and


 


(b)                                 such number of Compensation Units as is equal to 10.0% of the number
of Units issuable upon full conversion of the Convertible Notes sold to all
other purchasers excluding the Convertible Notes sold as Protected List
Purchases;


 


and each Compensation Option will be
exercisable into one Compensation Unit at an exercise price of $0.31 per
Compensation Unit at any time prior to 5:00 p.m. (Toronto time) on the second
anniversary of the Closing Date.


 


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“Compensation Option Certificate”
means the option certificate to be executed by the Company evidencing the
Compensation Options in form and substance satisfactory to the Company and the
Agent;


 


“Compensation Unit Shares” means
the Common Shares included in the Compensation Units;


 


“Compensation Units” means the
units of securities of the Company issuable upon exercise of the Compensation
Options, each such unit to be comprised of one Common Share and one-half of one
Warrant;


 


“Compensation Unit Warrants”
means the Warrants included in the Compensation Units;


 


“Compensation Warrant Shares”
means the Common Shares to be issued to the Agent upon exercise of the
Compensation Unit Warrants;


 


“Convertible Notes” shall have
the meaning ascribed thereto in the first paragraph of this Agreement;


 


“Convertible Note Certificates”
means the certificates to be executed by the Company evidencing the Convertible
Notes in form and substance satisfactory to the Company and the Agent;


 


“due inquiry”, when used in
relation to the Company, means after inquiries have been made of the
appropriate officers, employees and directors of the Company who may reasonably
be expected to have knowledge of facts which are material with respect to the
fact in question;


 


“Encumbrance” means any
encumbrance, lien, charge, hypothec, pledge, mortgage, title retention
agreement or other security interest;


 


“Exchange” means the Toronto
Stock Exchange;


 


“Exchange Approval” means the
conditional approval of the Exchange to the Offering, as set forth in a letter
dated June 3, 2004;


 


“including” means including
without limitation and shall not be construed to limit any general statement
which it follows to the specific or similar items or matters immediately
following it;


 


“Indemnified Party” shall have
the meaning ascribed thereto in Section 9.1;


 


“material change” means a
material change for the purposes of the Applicable Securities Laws or any of
them or where undefined under the Applicable Securities Laws of a jurisdiction
means a change in the business, operations or capital of the Company or its
subsidiaries, that would reasonably be expected to have a significant effect on
the market price or value of any of the Company’s securities and includes a decision
to implement such a change made by the Company’s board of directors or by
senior management of the Company who believe that confirmation of the decision
by the board of directors is probable;


 


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“material fact” means a material
fact for the purposes of the Applicable Securities Laws or any of them or where
undefined under the Applicable Securities Laws of a jurisdiction means a fact
that significantly affects, or would reasonably be expected to have a
significant effect on, the market price or value of the Company’s securities;


 


“misrepresentation” means a
misrepresentation as defined under the Applicable Securities Laws or any of
them or, where undefined under the Applicable Securities Laws of a jurisdiction,
means (i) an untrue statement of a material fact, or (ii) an omission to state
a material fact that is required to be stated or that is necessary to make a
statement not misleading in light of the circumstances in which it was made;


 


“MI 45-102” means Multilateral
Instrument 45-102 – Resale of Securities;


 


“Offering” shall have the meaning
ascribed thereto in the first paragraph of this agreement;


 


“Outstanding Convertible Securities”
means all options (whether put or call options), including options granted or
proposed to be granted to officers, directors, employees or consultants, share
purchase or acquisition rights or warrants and other convertible securities
outstanding as at the date of this agreement, whether issued pursuant to an
established plan or otherwise;


 


“person” includes any individual,
corporation, limited partnership, general partnership, joint stock company or
association, joint venture association, company, trust, bank, trust company,
land trust, investment trust society or other entity, organization, syndicate,
whether incorporated or not, trustee, executor or other legal personal
representative, and governments and agencies and political subdivisions
thereof;


 


“Protected List Purchases” means
purchases of up to an aggregate of $1,000,000 of Convertible Notes by
investors who are (i) residents of Norway; or (ii) insiders of the Company;


 


“Purchasers” means, collectively,
each of the purchasers of the Convertible Notes under the Offering, including,
if applicable, the Agent;


 


“Qualifying Provinces” means the
provinces of British Columbia, Alberta, Ontario and such other provinces as the
Agent and the company may agree upon;


 


“Securities Commissions” means,
collectively, the securities commissions or similar regulatory authorities in each
of the Qualifying Provinces and “Securities Commission” means a securities commission or
other securities regulatory authority in any one Qualifying Province as the
context may require;


 


“Selling Group” means,
collectively, those registered dealers appointed by the Agent to assist in the
Offering as contemplated in the fourth paragraph of this agreement;


 


“Subscription Agreements” means,
collectively, the subscription agreements entered into between the Purchasers
and the Company in respect of the Offering;


 


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“Subsidiaries” means the
subsidiaries (as such term is defined under the Securities Act (Ontario)) of the Company all as described in
Schedule “B” of this agreement;


 


“Survival Limitation Date” means
the second anniversary of the Closing Date;


 


“Tax Act”  means the Income Tax Act
(Canada), as amended from time to time and all rules and regulations made
pursuant thereto and any proposed amendments thereto;


 


“Time of Closing” means the time
on the Closing Date at which the Offering is to be completed, as specified in
Schedule “A” to this agreement;


 


“Underlying Compensation Securities” means the Compensation Unit Shares and Compensation Warrants
comprising the Convertible Notes issuable upon exercise of the Compensation
Options and the Compensation Warrant Shares;


 


“Units” means the units of
securities of the Company issuable upon conversion of the Convertible Notes,
each such unit (subject to adjustment in accordance with the terms of the
Convertible Note Certificates) to be comprised of on Common Share and one-half
of one Warrant;


 


“Unit Shares” means the Common Shares included in the Units;


 


“Warrants” means the Common Share purchase warrants to be included in the
Units and Compensation Units, having the attributes described in
Schedule “A” of this agreement;


 


“Warrant Certificates” means the warrant certificates issuable by the Company pursuant to
the terms of the Convertibles Notes or the Compensation Option Certificate, as
the case may be, evidencing the Warrants in form and substance satisfactory to
the Company and the Agent; and


 


“Warrant Shares” means the Common Shares issuable upon the exercise of the Warrants
included in the Units.


 


1.2                                 The division of this agreement into sections, subsections, paragraphs
and other subdivisions and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
agreement. Unless something in the subject matter or context is inconsistent
therewith, references herein to sections, subsections, paragraphs and other
subdivisions are to sections, subsections, paragraphs and other subdivisions of
this agreement. In this agreement, words importing the singular number only
shall include the plural and vice versa and words importing gender shall
include all genders.


 


1.3                                 Any action or payment required or permitted to be taken or made
hereunder on a day which is not a Business Day shall or may be, as the case may
be, taken or made on the next succeeding Business Day with the same force and
effect as if taken or made within the period for the taking or making of such
action.


 


1.4                                 This agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the federal laws of Canada applicable
therein and time shall be of the essence hereof.


 


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1.5                                 All amounts expressed herein in terms of money refer to lawful
currency of Canada and all payments to be made hereunder shall be made in such
currency.


 


1.6                                 The following are the schedules attached to this agreement, which
schedules are deemed to be a part hereof and are hereby incorporated by
reference herein:


 


	
  Schedule A

  	
   

  	
  –

  	
   

  	
  Details of the Offering

  
	
  Schedule B

  	
   

  	
  –

  	
   

  	
  Details as to the Subsidiaries of the
  Company

  
	
  Schedule C

  	
   

  	
  –

  	
   

  	
  Details as to Outstanding Convertible
  Securities

  
	
  Schedule D

  	
   

  	
  –

  	
   

  	
  Detail as to the intellectual property of
  the Company

  
	
  Schedule E

  	
   

  	
  –

  	
   

  	
  Terms for Purchasers and U.S. Persons

  
	
  Schedule F

  	
   

  	
  –

  	
   

  	
  Permitted Encumbrances

  



 


2.                                      Nature Of Transaction


 


2.1                                 Each Purchaser who is resident in one of the Qualifying Provinces
shall purchase under one or more “private placement” exemptions so that the
purchases will be exempt from the prospectus requirements of the Applicable
Securities Laws. Each other Purchaser shall purchase in accordance with such
procedures as the Company and the Agent may mutually agree, acting reasonably,
in order to fully comply with the Applicable Securities Laws. The Company
hereby agrees to use its commercially reasonable efforts to secure compliance
with all Applicable Securities Laws on a timely basis in connection with the
distribution of the Convertible Notes to the Purchasers, including by filing
within the periods stipulated under Applicable Securities Laws and at the
Company’s expense all private placement forms required to be filed by the
Company in connection with the Offering and paying all filing fees required to
be paid in connection therewith so that the distribution of the Convertible
Notes may lawfully occur in the Qualifying Provinces without the necessity of
filing a prospectus (including so as to ensure that the requirements for a four
month, from the Closing Date, “hold period” under MI 45-102 in respect of the
Convertible Notes, Units and Warrant Shares are complied with by the
Company).  The Agent agrees to assist
the Company in all reasonable respects to secure compliance with all regulatory
requirements in connection with the Offering. The Agent will notify the Company
with respect to the identity of each Purchaser as soon as practicable and with
a view to leaving sufficient time to allow the Company to secure compliance
with all relevant regulatory requirements under Applicable Securities Laws
relating to the sale of the Convertible Notes.


 


2.2                                 Any offering and sale of such Convertible Notes of a person resident
in the United States should be in accordance with Schedule “E” to this
agreement.


 


3.                                      Representations, Warranties and Covenants of the Agent


 


3.1                                 The Agent hereby represents, warrants and covenants with the Company
that it (and will use its commercially reasonable best efforts to cause the
members of the Selling Group to): (i) will conduct and has conducted activities
in connection with arranging for the sale of the Convertible Notes in compliance
with all Applicable Securities Laws; (ii) will not solicit and has not
solicited


 


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offers to purchase or sell the Convertible
Notes so as to require registration of, or filing of a prospectus, offering
memorandum or similar disclosure document with respect to the Convertible Notes
under the laws of any jurisdiction, including the United States and will not,
without the consent of the Company or as otherwise contemplated in this
agreement, solicit offers to purchase or sell the Convertible Notes in any
jurisdiction outside of the Qualifying Provinces where the solicitation or sale
of the Convertible Notes would result in any ongoing disclosure requirements in
such jurisdiction or in any registration requirements in such jurisdiction
except for the filing of a notice or report of the solicitation or sale, or
where the Company may be subject to liability in connection with the sale of
the Convertible Notes which is materially more onerous than its liability under
the Applicable Securities Laws in the Qualifying Provinces and any other
applicable securities legislation to which it is subject as at the date of this
agreement; (iii) will obtain from each Purchaser an executed Subscription
Agreement in a form reasonably acceptable to the Company and to the Agent
relating to the transactions herein contemplated, together with all
documentation (including questionnaires, undertakings and documents required by
the Exchange) as may be necessary in connection with subscriptions for
Convertible Notes, as applicable, to ensure compliance with Applicable
Securities Laws and Exchange Approval; (iv) will not provide, and has not
provided to prospective purchasers an offering memorandum within the meaning of
Applicable Securities Laws and will not advertise and has not advertised the
Offering in (A) printed media of general and regular paid circulation, (B)
radio, (C) television, or (D) telecommunication (including electronic display)
and will not make or has not made use of any green sheet or other internal
marketing document without the consent of the Company, such consent to be
promptly considered and not to be unreasonably withheld; (v) holds all licenses
and permits that are required for carrying on its activities as contemplated in
this agreement; (vi)  it has good and
sufficient right and authority to enter into this agreement and complete its
transactions contemplated under this agreement on the terms and conditions set
forth herein; (vii) it, and any member of the Selling Group is appropriately
registered under applicable securities legislation so as to permit it to
lawfully fulfil its obligations hereunder; (viii) it is a member in good
standing with the Exchange; and (ix) it will not, in connection with the Offering,
make any representation or warranty with respect to the Company or the
Convertible Notes except as set forth in the Subscription Agreement to be
entered into between the Purchasers and the Company or except as shall be
expressly authorized in writing by the Company;


 


4.                                      Representations, Warranties and Covenants of the Company


 


4.1                                 The Company hereby
represents, warrants and covenants to and with the Agent, for its own benefit
and in trust for the benefit of the Purchasers, that:


 


4.1.1                     General Matters


 


(a)                                  as at the date hereof: (i) the authorized capital of the Company
consists of an unlimited number of Common Shares; and (ii) the issued and
outstanding capital of the Company consists solely of 61,849,192 Common Shares,
all of which have been issued as fully paid and non-assessable;


 


(b)                                 the Company (i) has been duly organized and is validly existing and
in good standing under laws of the Province of Ontario; (ii) has all requisite
corporate power,


 


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authority and
capacity to carry on its business as now conducted and to own, lease and
operate its properties and assets; and (iii) will have all required corporate
power and authority to create, issue, allot and sell, as the case may be, the
Convertible Notes, the Unit Shares and Warrants, the Warrant Shares, the
Compensation Options and the Underlying Compensation Securities at the time of
their issuance, to enter into this agreement and the Subscription Agreements
and to execute the Convertible Note Certificates, the Warrant Certificates and
Compensation Option Certificate and to carry out the provisions of this
agreement, the Subscription Agreements, the Convertible Note Certificates, the
Warrant Certificates and the Compensation Option Certificate;


 


(c)                                  the ownership interest of the Company’s Subsidiaries is as set out
in Schedule “B” hereto, with such ownership interest being free and clear
of Encumbrances, except as otherwise noted in such Schedule and other than
the Encumbrances represented by the registrations and the Encumbrances defined
as Permitted Security Interests set out in Schedule “F”;


 


(d)                                 except for the Subsidiaries, the Company does not own and does not
have any agreements of any nature to acquire, directly or indirectly, any
securities, or other equity or proprietary interest in, any person and the
Company does not have any agreements to acquire or lease any other business
operations;


 


(e)                                  each of the Subsidiaries (i) has been duly incorporated and is
validly existing and in good standing under the laws of its jurisdiction of
subsistence and (ii) has all requisite power and authority to carry on its
business as now conducted and to own, lease and operate its properties and
assets;


 


(f)                                    the Company has not engaged in any “off balance sheet” or similar
financing;


 


(g)                                 the Company and each of the Subsidiaries is, in all material
respects, conducting its business in compliance with all applicable laws, rules
and regulations of each jurisdiction in which its business is carried on and is
duly licensed, registered or qualified in all jurisdictions in which it owns,
leases or operates its property or carries on business to enable its business
to be carried on as now conducted and its property and assets to be owned,
leased and operated and all such licences, registrations and qualifications are
and will at the Time of Closing be valid, subsisting and in good standing,
except in respect of matters which do not and will not result in any material
adverse change to the business, business prospects or condition (actual or
proposed, whether financial or otherwise) of the Company, taken as a whole, and
except for the failure to be so qualified or the absence of any such licence,
registration or qualification which does not and will not have a material
adverse effect on the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company, taken as a
whole;


 


(h)                                 attached as Schedule “C” to this agreement is a complete list
of all Outstanding Convertible Securities of the Company and the Subsidiaries
and, except as contemplated herein or under the terms of the securities listed
in Schedule “C”, no person now has any agreement or option or right or
privilege (whether by law, pre-emptive or contractual)


 


8

















 


issued or
capable of becoming an agreement for (i) the purchase, subscription or issuance
of any unissued shares, securities or warrants of the Company or any
Subsidiary; or (ii) the repurchase by or on behalf of the Company or any
Subsidiary, of any issued and outstanding securities of the Company or any
Subsidiary;


 


(i)                                     other than as disclosed in the Company’s management information
circular dated May 11, 2004, and to the best of the Company’s knowledge,
information and belief, after due inquiry, other than the constating documents
of the Company (to the extent that they would constitute an agreement), no
agreement exists among the shareholders of the Company in respect of the
Company and no agreement will exist at the Time of Closing;


 


(j)                                     neither the Company nor any of the Subsidiaries has committed an act
of bankruptcy or sought protection from its creditors from any court or
pursuant to any legislation, proposed a compromise or arrangement to its
creditors generally, taken any proceeding with respect to a compromise or
arrangement, taken any proceeding to have itself declared bankrupt or wound up,
as the case may be, taken any proceeding to have a receiver appointed of any
part of its assets, had any person holding an Encumbrance (an “Encumbrancer”)
or receiver take possession of any of its property, had an execution or
distress become enforceable or levied upon any portion of its property or had
any petition for a receiving order in bankruptcy filed against it, and at the
Time of Closing, neither the Company nor any of the Subsidiaries, will not be
an insolvent person (as that term is defined in the Bankruptcy and Insolvency Act (Canada));


 


(k)                                  other than the Encumbrances represented by the registrations and the
Encumbrances defined as Permitted Security Interests set out in
Schedule “F” hereto, the Company and each of the Subsidiaries is the owner
of all of its property and assets used by it in connection with its business,
unless leased or licensed, in each case with good and marketable title thereto,
free and clear of any Encumbrances and of any rights or privileges capable of
becoming Encumbrances;


 


(l)                                     except as otherwise disclosed in the Company’s Information Record,
neither the Company nor any of the Subsidiaries, is subject to any materially
adverse liabilities or obligations, direct or indirect, accrued, absolute,
contingent or otherwise;


 


(m)                               other than pursuant to written agreements, copies of which have been
provided to the Agent or its counsel, neither the Company nor any of the
Subsidiaries, has guaranteed or otherwise given security for or agreed to
guarantee or give security for any liability, debt or obligation of any person;


 


(n)                                 since December 31, 2003,  except as disclosed in the
Company’s Information Record and except as contemplated in this agreement, the
Company and each of the Subsidiaries has carried on business in the ordinary
course and there has not been:


 


(i)                                     any material change in the assets, liabilities or obligations
(absolute, accrued, contingent or otherwise), business, business prospects,
condition (financial or otherwise) or results of operations of the Company,
taken as a whole, other than: (A)


 


9

















 


the growth and
expansion of the business of the Company and (B) those changes occurring in the
ordinary course of business, none of which is (either singly or taken together)
materially adverse;


 


(ii)                                  any material change in the capital stock or long-term debt of the
Company, taken as a whole;


 


(iii)                               any material adverse change in the business, business prospects,
condition (financial or otherwise) or results of the operations of the Company,
taken as a whole;


 


(iv)                              any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares in the capital of the Company or any
direct or indirect redemption, purchase or other acquisition of any shares; or


 


(v)                                 any change in accounting or tax practices followed by the Company;


 


(o)                                 there is no action, proceeding or investigation (whether or not
purportedly by or on behalf of the Company or any of the Subsidiaries) pending
or, to the best of the Company’s knowledge, information and belief, after due
inquiry, threatened against or affecting the Company or any of the Subsidiaries
(including any predecessor companies) at law or in equity (whether in any
court, arbitration or similar tribunal) or before or by any federal,
provincial, state, municipal or other governmental department, commission,
board or agency, domestic or foreign which in any way materially adversely
affects the Company, taken as a whole, or the condition (financial or
otherwise) of the Company, taken as a whole, or which questions the validity of
the Convertible Notes or the issuance of the Unit Shares, Warrants, Warrant
Shares or the Underlying Compensation Securities or any action taken or to be
taken by the Company pursuant to or in connection with this agreement;


 


(p)                                 neither the Company nor any of the Subsidiaries is in default or in
breach in any material respect of, and the execution and delivery of this
agreement, the Subscription Agreements, the Convertible Note Certificates, the
Warrant Certificates, the Compensation Option Certificate by the Company, the
performance and compliance with the terms of such agreements and certificates
and the issue and sale, as applicable, of the Convertible Notes and the
Compensation Options by the Company will not result in any material breach of,
or be in conflict with or constitute a default under, or create a state of
facts which, after notice or lapse of time, or both, would constitute a default
under any term or provision of the constating documents, by-laws or resolutions
of the Company or any material mortgage, note, indenture, contract, agreement,
instrument, lease or other document to which the Company or any Subsidiary is a
party or by which any of them is bound or any judgment, decree, order, statute,
rule or regulation applicable to it;


 


(q)                                 the Company is, and will at the Time of Closing be, a “reporting issuer”
(or its equivalent), not in default, in the provinces of Ontario, Alberta and
British Columbia and will use its commercially reasonable best efforts to
maintain such status for a period from the date hereof up to and including the
fourth anniversary of the Closing. In particular,


 


10

















 


without
limiting the foregoing, the Company has at all times complied with its
obligations to make timely disclosure of all material changes relating to it
and no such disclosure has been made on a confidential basis and there is no
material change relating to the Company which has occurred and with respect to
which the requisite material change statement has not been filed, except to the
extent that the Offering constitute a material change;


 


(r)                                    no portion of the Company’s Information Record to the date hereof
contained a misrepresentation as at its date of public dissemination (provided
that the foregoing representation is not intended to extend to information and
statements in reliance upon and in conformity with information furnished to the
Company by or on behalf of the Agent specifically for use therein);


 


(s)                                  to the best of the Company’s knowledge, the auditors who audited the
consolidated financial statements of the Company most recently delivered to the
securityholders of the Company and delivered their report with respect thereto
are a participating audit firm as required by National Instrument 52-108 –
Auditor Oversight;


 


(t)                                    there has never been any reportable disagreement during the five
year period preceding the date of this agreement (within the meaning of
National Instrument 51-102 Continuous Disclosure Obligations) with the present
or any former auditor of the Company;


 


(u)                                 the currently issued and outstanding Common Shares are listed and
posted for trading on the Exchange and no order ceasing or suspending trading
in any securities of the Company or prohibiting the issue and sale, as
applicable, of the Convertible Notes, Warrants, Warrant Shares, Compensation Options
or Underlying Compensation Securities or the trading of any of the Company’s
issued securities has been issued and no proceedings for such purpose are
pending or, to the best of the Company’s knowledge, information and belief,
after due inquiry, threatened;


 


(v)                                 Equity Transfer Services Inc. has been duly appointed as the
registrar and transfer agent for the Common Shares at its principal transfer
office in the City of Toronto;


 


(w)                               the Company and each of the Subsidiaries has filed all federal, provincial,
local and foreign tax returns that are required to be filed or have requested
extensions thereof (except in any case in which the failure so to file would
not have a material adverse effect on the assets and properties, business,
results of operations, prospects or condition (financial or otherwise) of the
Company, taken as a whole) and has paid all taxes required to be paid by it and
any other assessment, fine or penalty levied against it, to the extent that any
of the foregoing is due and payable, except for any such assessment, fine or
penalty that has been disclosed to the Agent and is currently being contested
in good faith. The Company and each of the Subsidiaries has withheld from each
payment made to any of its past or present employees, officers or directors,
the amount of all taxes and other deductions required to be withheld therefrom
and has paid the same to the proper tax or other receiving officers within the
time required under the applicable legislation;


 


11

















 


(x)                                   the Company and each of the Subsidiaries has established on its
books and records reserves that are adequate for the payment of all taxes not
yet due and payable and there are no liens for taxes on the assets of the
Company or any of the Subsidiaries, except for taxes not yet due and there are
no audits known by the Company or, to the best of the Company’s knowledge,
information and belief, after due inquiry, to be pending, of the tax returns of
the Company or any of the Subsidiaries (whether federal, provincial, local or
foreign) and to the best of  the
Company’s knowledge, information and belief, after due inquiry, there are no
claims which have been or may be asserted relating to any such tax returns,
which audits and claims, if determined adversely, would result in the assertion
by any governmental agency of any deficiency that would have a material adverse
effect on the assets or properties, business, results of operations, prospects
or condition (financial or otherwise) of the Company, taken as a whole;


 


(y)                                 none of CCRA or any provincial, state or foreign taxation authority
has asserted or, to the best of the Company’s knowledge, information and
belief, after due inquiry, threatened to assert any assessment, claim or
liability for taxes due or to become due in connection with any review or
examination of the tax returns of the Company or any of the Subsidiaries filed
for any year which would have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition (financial
or otherwise) of the Company, taken as a whole;


 


(z)                                   the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that: (i)
transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences;


 


(aa)                            neither the Company or any of the Subsidiaries nor, to the best of
the Company’s knowledge, information and belief, after due inquiry, any other
party is in default in the observance or performance of any material term or
material obligation to be performed by any of them under any material contract
to which the Company or any of the Subsidiaries is a party or otherwise bound
and no event has occurred which with notice or lapse of time or both would
constitute such a default, in any such case which default or event would have a
material adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company,
taken as a whole;


 


(bb)                          the net proceeds of the Offering will be used in the manner
specified in Schedule ”A” hereto;


 


(cc)                            this agreement, the Subscription Agreements, the Convertible Note
Certificates, the Warrant Certificates, the Compensation Option Certificate and
all other contracts and documentation required in connection with the issue and
sale of the Convertible Notes and the Compensation Options and the distribution
of the Unit Shares, Warrants, Warrant


 


12

















 


Shares and
Underlying Compensation Securities shall be, prior to the Closing Date, duly
authorized, executed and delivered by the Company, and each when executed and
delivered shall be a valid and binding obligation of the Company enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by (i) bankruptcy, insolvency, moratorium or similar laws affecting creditor’s
rights generally, (ii) general equitable principles, or (iii) limitations under
applicable law in respect of rights of indemnity, contribution and waiver of
contribution;


 


(dd)                          the attributes of the Convertible Notes, Warrants, Warrant Shares,
Compensation Options and Underlying Compensation Securities will conform in all
material respects with the description thereof in this agreement and the
Subscription Agreements;


 


(ee)                            the forms of the certificates representing the Common Shares, the
Convertible Notes, the Warrants and Compensation Options have been duly
approved by the directors of the Company and the certificate representing the
Common Shares complies with the provisions of the Business Corporations Act
(Ontario) and, to the extent applicable, the rules and policies of the
Exchange;


 


(ff)                                there is no person acting or purporting to act at the request of the
Company, other than the Agent, who is entitled to any brokerage, agency or
similar fee in connection with the transactions contemplated herein;


 


(gg)                          the Company and each of the Subsidiaries has its property and assets
insured against loss or damage by insurable hazards or risks. Such insurance
coverage is of a type and in an amount typical to the business in which the
Company and its Subsidiaries operate as conducted by a reasonably prudent
person, based on the advice of reputable insurance brokers consulted by the
Company. Neither the Company nor any of its Subsidiaries has made any material
claim on any policy of insurance or been refused any insurance coverage sought
or applied for. The Company does not have any reason to believe that it will
not be able to renew its existing insurance coverage of the Company and each of
the Subsidiaries as an when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business at a cost
that would not be reasonably expected to have a material adverse effect on the
assets or properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company, taken as a whole;


 


(hh)                          except as disclosed in the Company’s Information Record and to the
best of the Company’s knowledge, information and belief, after due inquiry,
none of the directors or officers of the Company or any Subsidiary, any holder
of more than 10% of any class of shares of the Company, or any associate or
affiliate (as such terms are defined in the Securities Act (Ontario)) of any of
the foregoing persons, has any material interest, direct or indirect, in any
material transaction or any proposed material transaction which, as the case
may be, materially affected, is material to or will materially affect the
Company;


 


(ii)                                  the Company will promptly notify the Agent in writing if, prior to
the Time of Closing, there shall occur any material change or change in a
material fact (in either case, whether actual, anticipated, contemplated or
threatened and other than a change or fact


 


13

















 


relating
solely to the Agent) or any event or development involving a prospective
material change or a change in a material fact in any or all of the business,
affairs, operations, assets (including information or data relating to the
estimated value or book value of assets), liabilities (contingent or
otherwise), capital, ownership, control, management or prospects of the
Company;


 


(jj)                                  the Company will promptly notify the Agent in writing with full
particulars of any such actual, anticipated, contemplated, threatened or
prospective change or other matter referred to in the first preceding
paragraph;


 


(kk)                            the Company will in good faith discuss with the Agent as promptly as
possible any circumstance or event which is of such a nature that there is or
ought to be consideration given as to whether there may be a material change or
change in a material fact or other matter as described in the proceeding two
paragraphs; and


 


neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has paid or will pay any commission or other remuneration, directly or
indirectly for soliciting the exercise of the Warrants.


 


4.1.2                     Intellectual Property


 


(a)                                  for the purposes of this Section 4.1.2, “Intellectual Property”
means the intellectual and industrial property specified in paragraphs (c) and
(d) below and all Intellectual Property Rights therein, including works
protected by the law of copyright, trade-marks, patents, inventions and
discoveries, industrial designs, trade secrets, know-how and rights to
information of a confidential nature;


 


(b)                                 for the purposes of this Section 4.1.2, “Intellectual Property
Rights” means all intellectual and industrial property rights,
including all rights to copyrights, trade-marks, patents, inventions and
discoveries, industrial designs, design rights, trade secrets, know-how and
rights to information of a confidential nature;


 


(c)                                  attached hereto as Part I of Schedule “D” is a complete and
accurate list and particulars of all Intellectual Property owned by the Company
or the Subsidiaries (the “Owned Intellectual Property”);


 


(d)                                 attached hereto as Part II of Schedule “D” is a complete list
of all Intellectual Property which the Company and/or Subsidiaries have license
to use but do not own, other than “off the shelf” software which is generally
available to the public and has not been customized for use by the business of
the Company or any of the Subsidiaries (the “Licensed Intellectual Property”),
as well as a complete list of the agreements, licenses and consents under which
the Company or the Subsidiaries have been granted the right to use the Licensed
Intellectual Property.  To the best of
the Company’s knowledge, information and belief, after due inquiry, all such
agreements, licenses and consents are in full force and effect and neither the
Company nor the Subsidiaries are in breach of any provisions thereof;


 


14

















 


(e)                                  the Owned Intellectual Property and the Licensed Intellectual
Property together comprise all Intellectual Property necessary to conduct the
respective businesses of the Company and the Subsidiaries;


 


(f)                                    except as disclosed on the Company’s Information Record, the
Company, directly or through the Subsidiaries, is the beneficial owner of the
Owned Intellectual Property, free and clear of all Encumbrances (other than the
Encumbrances represented by the registrations and the Encumbrances defined as
Permitted Security Interests set out in Schedule “F” attached hereto), and
is not a party to or bound by any contract, agreement, or other obligation
whatsoever that limits or impairs its ability to sell, transfer, assign or
convey, or that otherwise affects, the Owned Intellectual Property other than
pursuant to the contracts, agreements or obligations set out in
Schedule “D”.  Same as set out in
Schedule “D”, no person has been granted any interest in or right to use
all or any portion of the Owned Intellectual Property;


 


(g)                                 the Company is not aware of a claim of any infringement or breach of
any Intellectual Property Rights of any other Person by the Company, nor has
the Company or any of the Subsidiaries received any notice that the conduct of
its business, including the use of the Owned Intellectual Property or the
Licensed Intellectual Property, infringes upon or breaches any Intellectual
Property Rights of any other Person.  To
the best of the Company’s knowledge, information and belief, after due inquiry,
the conduct of the respective businesses of the Company and the Subsidiaries
does not infringe upon the Intellectual Property Rights or use in any
unauthorized manner the intellectual property of any other Person.  To the best of Company’s knowledge,
information and belief, after due inquiry, there has been no infringement or
violation of any of its rights in the Owned Intellectual Property by any other
Person.    The Company is not aware of
any state of facts that casts doubt on the validity or enforceability of any of
the Intellectual Property Rights in the Owned Intellectual Property.  The Company has provided to the Agent true
and complete copies of all contracts and amendments thereto that relate to the
Owned Intellectual Property and Licensed Intellectual Property;


 


(h)                                 the Owned Intellectual Property is not, and to the best of the
Company’s knowledge, information and belief, after due inquiry, will not be,
the subject of any claims of opposition from any employees or contract staff of
the Company or any of the Subsidiaries. 
Except as disclosed in Schedule “D” to this Agreement, all
Intellectual Property, developed by Persons employed by or under contract to
the Company or any of the Subsidiaries and used or enjoyed in the business of
the Company or any of the Subsidiaries, was developed in the normal course of
the employee’s or contractor’s duties, and no claim for compensation under any
applicable laws has been made or is pending. 
The Company and each of the Subsidiaries has, or on and prior to the
Time of Closing will have, entered into confidentiality agreements and
agreements with regard to ownership of Intellectual Property with all current
employees employed full-time or part-time within the business, and with all
independent contractors who currently provide services (other than contract
research) to the business; and


 


15

















 


(i)                                     save as set out in Schedule “D”, no license has been granted to
any third party in respect of any of the Owned Intellectual Property and to the
best of the Company’s knowledge, information and belief, after due inquiry,
there are no circumstances which could entitle a third party to call for such a
license.


 


4.1.3                     Due Diligence Matters


 


(a)                                  Prior to the Closing Date, the Company shall allow the Agent to
conduct all due diligence which they may reasonably require to conduct in
respect of the Offering and if one or more visits to the offices of the Company
is required, such visit(s) shall be made within normal business hours; and


 


(b)                                 the minute books and corporate records of the Company and the
Subsidiaries made or to be made available to Goodman and Carr LLP or its local
agent counsel in connection with the Agent’s due diligence investigations of
the Company for the period from their respective dates of incorporation to the
date of examination thereof, are the original minute books and records of the
Company and the Subsidiaries or true copies thereof and contain copies of all
proceedings (or certified copies thereof) of the shareholders, the boards of
directors and all committees of the boards of directors of such companies and
there have been no other proceedings of the shareholders, boards of directors
or any committee of the boards of directors of such companies to the date of
review of such corporate records and minute books not reflected in such minute
books and corporate and other records other than those which have been
disclosed to the Agent in writing and those which or not material in the
context of the Company, taken as a whole.


 


4.1.4                     Employment Matters


 


(a)                                  The Company and each of the Subsidiaries is in all material respects
in compliance with all applicable laws and regulations respecting employment
and employment practices;


 


(b)                                 each material plan for retirement, bonus, stock purchase, profit
sharing, stock option, deferred compensation, severance or termination pay,
insurance, medical, hospital, dental, vision care, drug, sick leave,
disability, salary continuation, legal benefits, unemployment benefits,
vacation, incentive or otherwise contributed to or required to be contributed
to, by the Company or any of the Subsidiaries for the benefit of any current or
former director, officer, employee or consultant (the “Employee Plans”)
has been maintained in material compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations that are
applicable to such Employee Plan. The Company does not and has not had any
pension plan (as that term is defined in the Pension Benefits Act (Ontario));


 


(c)                                  all material accruals for unpaid vacation pay, premiums for
unemployment insurance, health premiums, federal or provincial pension plan
premiums, accrued wages, salaries and commissions and Employee Plan payments
have been reflected in the books and records of the Company and the
Subsidiaries;


 


16

















 


(d)                                 there has not been and there is not to the knowledge of the Company,
after due inquiry, currently any labour trouble which is adversely effecting or
could adversely effect, in a material manner, the carrying on of the business
of the Company and the Subsidiaries; and


 


(e)                                  except as disclosed in the Company’s Information Record and to the
best of the Company’s knowledge, information and belief, after due inquiry,
neither the Company nor any of the Subsidiaries owes any monies to, nor has the
Company or any of the Subsidiaries any present loans to, or borrowed any monies
from or is otherwise indebted to, any officer, director, employee, shareholder
or any person not dealing at “arm’s length” (as such term is defined in the Tax
Act) with any of them except for usual employee reimbursements and compensation
paid in the ordinary and normal course of its business. To the best of the
Company’s knowledge information and belief, after due inquiry, except  usual employee or consulting arrangements
made in the ordinary and normal course of business, neither the Company nor any
of the Subsidiaries is a party to any contract, agreement or understanding with
any officer, director, employee, shareholder or any other person not dealing at
arm’s length with it. To the best of the Company’s knowledge, information and
belief, after due inquiry, no officer, director or employee of the Company or
any of the Subsidiaries and no entity which is an affiliate or associate of one
or more of the foregoing, owns, directly or indirectly, any interest in (except
for shares representing less than 5% of the outstanding shares of any class or
series of any publicly traded company), or is an officer, director, employee or
consultant of, any person which is, or is engaged in, a business competitive
with the Company which could materially adversely impact on the ability to duly
and properly perform its services. To the knowledge of the Company, after due
inquiry, no officer, director, employee or security holder of the Company or
any of the Subsidiaries has any cause of action or other claim whatsoever
against, or owes any amount to, the Company or any of the Subsidiaries in
connection with its business except for claims in the ordinary and normal
course of the business such as for accrued vacation pay or other amounts or
matters which would not be material to the Company.


 


4.1.5                     Regulatory Matters


 


(a)                                  All necessary documents and proceedings have been or will be filed
and taken and all other legal requirements have been or will be fulfilled under
each of the Applicable Securities Laws in connection with the issuance and sale
of the Convertible Notes, Units and Warrant Shares to the Purchasers and the
Compensation Options and the Underlying Compensation Securities to the Agent.


 


5.                                      Covenants of the Company


 


The Company hereby covenants to and with the
Agent on its own behalf and on behalf of the Purchasers as follows:


 


17

















 


5.1                                 General Covenants


 


(a)                                  The Company will cause the Convertible Notes, Unit Shares, Warrants,
the Warrant Shares, the Compensation Options and the Underlying Compensation
Securities, to be duly and validly created and issued (in the case of all such
securities other than the Warrants, the Compensation Options and the
Compensation Warrants, as fully-paid and non-assessable);


 


(b)                                 the Company will accept or reject, in whole or in part, in its sole
discretion Subscription Agreements with the Purchasers and, provided it shall
not reject any Subscription Agreement unless the Company, acting reasonably,
makes the determination that it is prudent to reject any such Subscription
Agreement;


 


(c)                                  the Company will use its commercially reasonable best efforts to obtain
the necessary regulatory consents from the Exchange for the issuance of the
Convertible Notes and the Compensation Options, in each case on such conditions
as are acceptable to the Agent and the Company, acting reasonably;


 


(d)                                 the Company will use its commercially reasonable best efforts to
arrange for the listing and posting for trading of the Unit Shares, the Warrant
Shares, the Compensation Unit Shares and the Compensation Warrant Shares on the
Exchange as soon as possible following their issue;


 


(e)                                  the Company will comply with the applicable provisions of MI 45-102
such that the Purchasers resident in such jurisdictions where MI 45-102 is in
force will be entitled to avail themselves of the four month from the Closing
Date “hold period” in respect of the Convertible Notes, Unit Shares, Warrants
and Warrant Shares in accordance with MI 45-102; and


 


(f)                                    the Company will not, directly or indirectly offer, issue, sell,
contract to sell, announce an intention to sell, sell any option or contract to
purchase, purchase any option or contract to sell any Common Shares or
financial instruments convertible or exchangeable into Common Shares (other
than for the issuance of options under the Company’s existing option plan and
securities issued in connection with an arms’ length acquisition, merger,
consolidation or amalgamation with any one or more corporations or for the
issuance of Common Shares pursuant to any purchase warrants or Compensation
Options existing on the date hereof) for a period ending 180 days after the
Closing Date without the prior written consent of the Agent, such consent not
to be unreasonably withheld;


 


6.                                      Conditions to Purchase Obligation


 


6.1                                 The following are conditions of the Agent’s and the Purchasers’
obligations to close the purchase of the Convertible Notes from the Company as
contemplated hereby, which conditions the Company covenants to exercise its
commercially reasonable efforts to have fulfilled at or prior to the Closing
Date, which conditions may be waived in writing in whole or in part by the
Agent on its own behalf and on behalf of the Purchasers:


 


18

















 


(a)                                  the Company’s board of directors shall have authorized and approved
this agreement, the forms of Subscription Agreements, Convertible Note
Certificates, Warrant Certificates, Compensation Option Certificate and any
other agreements or documents pursuant to which the Convertible Notes, Unit
Shares, Warrants, Warrant Shares, Compensation Options and Underlying
Compensation Securities are to be issued, the issuance of the Convertible
Notes, Warrants, Warrant Shares, Compensation Options and Underlying
Compensation Securities and all matters relating to the foregoing;


 


(b)                                 the Company shall have made and/or obtained the necessary filings,
approvals, consents and acceptances of the appropriate regulatory authorities
in the Qualifying Provinces and the Exchange in connection with the Offering,
on terms which are acceptable to the Company and the Agent, acting reasonably,
on or prior to the Closing Date, it being understood that the Agent shall do
all that is reasonably required to assist the Company to fulfil this condition;


 


(c)                                  the Unit Shares, Warrant Shares, Compensation Unit Shares and
Compensation Warrant Shares shall have been conditionally accepted for listing
and will, as soon as possible following their issue, be posted for trading on
the Exchange (subject only to the usual conditions of the Exchange);


 


(d)                                 the Company shall deliver a certificate of the Company, signed on
behalf of the Company, without personal liability, by a senior officer of the
Company as may be acceptable to the Agent, acting reasonably, addressed to the
Agent, its counsel and to the Purchasers and dated the Closing Date, in form
and content satisfactory to the Agent’s counsel, acting reasonably, certifying
that:


 


(i)                                     no order ceasing or suspending trading in any securities of the
Company or prohibiting the issuance and sale of the Convertible Notes, Unit
Shares, Warrants, Warrant Shares, Compensation Options, Underlying Compensation
Securities or any of the Company’s issued securities has been issued and no
proceedings for such purpose are pending or, to the best of the knowledge,
information and belief of such officers, after due inquiry, threatened;


 


(ii)                                  the representations and warranties of the Company contained in this
agreement are true and correct at the Time of Closing, with the same force and
effect as if made by the Company as at the Time of Closing, after giving effect
to the transactions contemplated hereby; and


 


(iii)                               the Company has complied with all the covenants and satisfied all
the terms and conditions of this agreement on its part to be complied with or
satisfied at or prior to the Time of Closing which have not otherwise been
waived pursuant to the terms of this agreement;


 


(e)                                  the Company shall have accepted the Subscription Agreements with the
Purchasers and, unless the Company, acting reasonably, makes the determination
that it is prudent to reject any such Subscription Agreement, the Company will
accept each duly executed


 


19

















 


Subscription
Agreement accompanied by the required subscription funds submitted to the
Company;


 


(f)                                    the Company will have caused a favourable legal opinion to be delivered
by its counsel addressed to the Agent, its counsel and the Purchasers in the
Qualifying Provinces with respect to such matters as the Agent may reasonably
request relating to this transaction, acceptable in all reasonable respects to
the Agent’s counsel, including to the effect that:


 


(i)                                     the Company is validly subsisting under the laws of the Province of
Ontario and has all requisite corporate power, authority and capacity to carry
on its business as now conducted and to own, lease and operate its properties
and assets;


 


(ii)                                  the Company has the corporate capacity and power to execute and
deliver this agreement, the Subscription Agreements and any additional
agreements or certificates relating to the issuance of the Convertible Notes,
Unit Shares, Warrants, Warrant Shares, Compensation Options and Underlying
Compensation Securities and to perform its obligations hereunder and
thereunder;


 


(iii)                               this agreement, the Subscription Agreements and the other
agreements, certificates or instruments pursuant to which the Convertible
Notes, Unit Shares, Warrants, Warrant Shares, Compensation Options and
Underlying Compensation Securities are to be issued have been duly authorized,
and the Convertible Notes and Compensation Options have been duly executed and
delivered by the Company and are legally binding upon the Company and
enforceable in accordance with their respective terms (subject to the usual
qualifications);


 


(iv)                              the Notes and the Compensation Options have been validly created and
issued;


 


(v)                                 the Unit Shares, Warrants, Convertible Notes, Warrant Shares, and
Underlying Compensation Securities have been reserved for issuance and when
issued upon the right of conversion (including automatic conversion) or
purchase, as the case may be, in accordance with the terms of the Convertible
Note Certificates, Warrant Certificates and the Compensation Option
Certificate, respectively, and upon receipt by the Company of the proper
consideration therefor, and in the case of the Unit Shares, Convertible Notes,
Warrant Shares, Compensation Unit Shares and Compensation Warrant Shares will
be validly issued as fully paid and non- assessable;


 


(vi)                              the Exchange has conditionally approved the Units Shares, Warrants
Shares, Compensation Unit Shares and Compensation Warrant Shares for listing,
subject to the Corporation fulfilling all of the requirements of the Exchange
as set out in the Exchange’s conditional approval letter dated June 3,
2004, and subject to the Exchange’s discretion to refuse to provide final
acceptance for the subscription of a subscriber;


 


20

















 


(vii)                           the execution and delivery of this agreement, the Subscription
Agreements and the other agreements, certificates or instruments pursuant to
which the Convertible Notes, Unit Shares, Warrants, Warrant Shares,
Compensation Options and Underlying Compensation Securities are to be issued,
the fulfilment of the terms hereof and thereof, the issue, sale and delivery at
the Closing Date of the Convertible Notes and Compensation Options (and any
securities issuable, directly or indirectly, thereunder) do not and will not
result in a breach of and do not create a state of facts which after notice or
lapse of time or both will result in a breach of, and do not and will not conflict
with, any of the terms, conditions or provisions of the constating documents of
the Company;


 


(viii)                        the offering, sale and delivery by the Company of the Convertible
Notes to the Purchasers and the Compensation Options to the Agent are exempt
from the prospectus and registration requirements of the Applicable Securities
Laws and no documents are required to be filed, proceedings taken or approvals,
permits, consents, orders or authorizations obtained under the Applicable
Securities Laws to permit such offering, sale and delivery, other than the
filing of any private placement reports, fees or undertakings required to be
filed under such laws;


 


(ix)                                the issue and delivery of the Unit Shares and Warrants upon due
conversion of the Convertible Notes, the Warrant Shares and Compensation
Warrant Shares upon due exercise of the Warrants, and the Compensation Unit
Shares and Compensation Warrants upon due excise of the Compensation Options
are exempt from the prospectus and registration requirements of the Applicable
Securities Laws and no documents are required to be filed, proceedings taken or
approvals, permits, consents, orders or authorizations obtained under the
Applicable Securities Laws to permit such issue and delivery, other than the
filing of any private placement reports, fees or undertakings required to be
filed under such laws;


 


(x)                                   as to the first trade rights and restrictions relating to the
Convertible Notes, Unit Shares, Warrants, Warrant Shares and Underlying
Compensation Securities; and


 


(xi)                                as to such other legal matters which counsel for the Company and the
Agent, acting reasonably, may agree upon.


 


In giving such opinions, counsel to the
Company shall be entitled to rely where appropriate upon local counsel and
shall be entitled as to matters of fact not within their knowledge to rely upon
a certificate of fact from responsible persons in a position to have knowledge
of such facts and their accuracy and shall be entitled to rely on certificates
of such public officials and other persons as are necessary or
appropriate.  The Company agrees, and
the aforesaid legal opinion shall expressly provide, that the Agent may deliver
copies of the opinion to each of the addressees thereof;


 


21

















 


(g)                                 The directors and senior officers of the Company shall execute and
deliver the special covenant addressed to the Agent set out in Appendix I of
Schedule “A” to this agreement; and


 


(h)                                 the Agent shall have received such other certificates, statutory
declarations, opinions, agreements and materials, in form and substance
satisfactory to the Agent and its counsel, as the Agent or its counsel may
reasonably request.


 


7.                                      Closing


 


7.1                                 The Offering will be completed at the offices of the Company’s legal counsel,
Gowling Lafleur Henderson LLP, 40 King Street West, Toronto, Suite 5800,
Ontario, M5H 3Z7 at the Time of Closing or such other place, date or time as
may be mutually agreed to, provided that if the Company has not been able to
comply with any of the covenants or conditions set out herein required to be
complied with by the Time of Closing or such other date and time as may be
mutually agreed to, the respective obligations of the parties will terminate
without further liability or obligation except for payment of expenses in
accordance with Section 11, indemnity in accordance with Section 9
and contribution in accordance with Section 10.


 


7.2                                 At the Time of Closing, the Company shall deliver to the Agent:


 


(a)                                  Convertible Note Certificates duly registered as the Agent may
direct;


 


(b)                                 the Compensation Option Certificate duly registered as the Agent may
direct;


 


(c)                                  the requisite legal opinions and certificates as contemplated above;
and


 


(d)                                 such further documentation as may be contemplated herein or as
counsel to the Agent or the applicable regulatory authorities may reasonably
require,


 


against payment of the purchase price for the
Convertible Notes by certified cheque, wire transfer or bank draft and delivery
of the duly completed and executed Subscription Agreements and other
documentation required to be provided by or on behalf of the Purchasers or the
Agent pursuant to this agreement. The Company will, at the Time of Closing, and
upon such payment of the purchase price, pay the Agency Fee to the Agent and reimburse
the Agent for all of its reasonable estimated expenses as contemplated in
Section 11 hereto incurred up to the Closing Date upon the delivery by it
to the Company of one or more invoices therefor, subject to any adjustment when
such actual expenses are finally determined in accordance with, and any
limitations set out in, Section 11 hereof.


 


7.3                                 All terms and conditions of this agreement shall be construed as
conditions and any breach or failure to comply with any such terms and
conditions shall entitle the Agent to terminate its obligations (and that of
the Purchasers to purchase the Convertible Notes) by written notice to that
effect given to the Company prior to the Time of Closing. It is understood that
the Agent may waive in whole or in part, or extend the time for compliance
with, any of such terms and conditions on behalf of themselves and the
Purchasers without prejudice to their rights in respect of any such


 


22

















 


terms and conditions or any other
subsequent breach or non-compliance, provided that to be binding on the Agent
and the Purchasers, any such waiver or extension must be in writing.


 


8.                                      Termination of Purchase Obligation


 


8.1                                 Without limiting any of the foregoing provisions of this agreement,
and in addition to any other remedies which may be available to it, the Agent
(on its own behalf and on behalf of the Purchasers) shall be entitled, at its
option, to terminate and cancel, without any liability, its obligations under
this agreement and those of the Purchasers, by giving written notice to the
Company at any time through to the Time of Closing, if:


 


(a)                                  the Agent, acting reasonably, is not satisfied in any reasonable
respect with the results of its due diligence investigations carried out prior
to the Time of Closing;


 


(b)                                 any order or ruling is issued, any inquiry, investigation or other
proceeding (whether formal or informal) in relation to the Company or any of
the Subsidiaries or any of their respective directors and officers is made,
threatened or announced by any officer or official of any stock exchange,
Securities Commission or other regulatory authority (other than an order based
solely upon the activities or alleged activities of the Agent) or any law or
regulation in a Qualifying Province is promulgated or changed which operates to
prevent or restrict trading in or distribution of the Convertible Notes, Unit
Shares, Warrants, Warrant Shares, Compensation Options or Underlying
Compensation Securities;


 


(c)                                  there should develop, occur or come into effect any incident of
national or international consequence, any law, regulation or inquiry or any
other event, action or occurrence of any nature whatsoever which, in the
reasonable opinion of the Agent, materially and adversely affects or may
materially and adversely affect the financial markets in Canada generally or
the business, affairs or capital of the Company, taken as a whole;


 


(d)                                 there should occur any material change or change in a material fact
which, in the reasonable opinion of the Agent, impacts materially and adversely
on the marketability of the Convertible Notes;


 


(e)                                  the Company is in breach of any material term, condition or covenant
of this agreement (which has not been waived, in writing, by the Agent) or any
material representation or warranty given by the Company in this agreement
becomes or is false (and such representation or warranty is not waived, in
writing, by the Agent); or


 


(f)                                    if the Agent otherwise determines it would be unprofitable or
impractical to offer or continue to offer the Convertible Notes;


 


the occurrence or non-occurrence of any of
the foregoing events or circumstances to be determined in the sole discretion
of the Agent, acting reasonably.


 


8.2                                 The Agent shall make reasonable efforts to give notice to the
Company (in writing or by other means) of the occurrence of any of the events
referred to in Section 8.1, provided that neither


 


23

















 


the giving nor the failure to give such
notice shall in any way affect the Agent’s entitlement to exercise this right
at any time through to the Time of Closing.


 


8.3                                 The Agent’s rights of termination contained in this section are
in addition to any other rights or remedies it may have in respect of any
default, act or failure to act or non-compliance by the Company in respect of
any of the matters contemplated by this agreement.


 


8.4                                 If the obligations of the Agent and the Purchasers are terminated
under this agreement pursuant to the termination rights provided for in
Section 8.1, the Company’s liabilities to the Agent and the Purchasers
shall be limited to the Company’s obligations under the indemnity, contribution
and expense provisions of Sections 9, 10, and 11, respectively, of this
agreement.


 


9.                                      Indemnity


 


9.1                                 The Company hereby covenants and agrees to indemnify the Agent, and
its directors, officers, shareholders, employees and agents (each being
hereinafter referred to as an “Indemnified Party”), against all losses (other than a loss
of profits), claims, actions, damages, liabilities, costs or expenses, joint or
several, including reimbursement to the Agent upon demand of the aggregate
amount paid in settlement of any actions, suits, proceedings or claims and the
reasonable fees and expenses of their counsel that may be incurred in advising
with respect to and/or defending any claim to which any Indemnified Party may
become subject or otherwise involved in any capacity under any statute or
common law or otherwise, caused or incurred by reason of:


 


(a)                                  the Indemnified Party having acted as agent of the Company in
respect of the Offering (other than by reason of the negligence, wilful
misconduct or bad faith of the Indemnified Party);


 


(b)                                 any statement (other than a statement relating solely to, and
provided by, the Agent) contained in the Company’s Information Record which, at
the time and in the light of the circumstances under which it was made,
contains or is alleged to contain a misrepresentation;


 


(c)                                  the omission or alleged omission to state in any certificate of the
Company delivered hereunder or pursuant hereto or in the Company’s Information
Record any material fact (other than a material fact omitted in reliance upon
information furnished to the Company by or on behalf of the Agent) required to
be stated therein or necessary to make any statement therein not misleading in
light of the circumstances under which it was made;


 


(d)                                 any order made or inquiry, investigation or proceeding commenced or
threatened by any Securities Commission or other competent authority based upon
any misrepresentation or alleged misrepresentation in the Company’s Information
Record (other than a statement included in reliance upon information furnished
to the Company by or on behalf of the Agent) which prevents or restricts the trading
in the Convertible Notes, Unit Shares, Warrants, Warrant Shares, Underlying
Compensation Securities or the distribution to the public, as the case may be,
of the Convertible Notes, Unit Shares, Warrants or Warrant


 


24

















 


Shares in any
of the Qualifying Provinces or the distribution to the Agent of the Underlying
Compensation Securities;


 


(e)                                  the Company not complying with any requirement of any Applicable
Securities Laws or regulatory requirements (including any private placement
filing or other requirements under any of the Applicable Securities Laws in
connection with the Offering); or


 


(f)                                    any material breach of any representation or warranty of the Company
contained herein or the failure of the Company to comply with any of its
obligations hereunder.


 


9.2                                 If any action or claim shall be asserted against an Indemnified
Party in respect of which indemnity may be sought from the Company pursuant to
the provisions of Section 9.1 or if any potential claim contemplated
hereby shall come to the knowledge of an Indemnified Party, the Indemnified
Party shall promptly notify the Company in writing. If, through the fault of
the Indemnified Party, the Company does not receive notice of any such action,
claim or potential claim in time to contest effectively the determination of
any liability susceptible of being contested, the Company shall be entitled to
set off against the amount claimed by the Indemnified Party the amount of any
losses incurred by the Company which result from the Indemnified Party’s
failure to give such notice on a timely basis. The Company shall be entitled
but not obligated to participate in or assume the defence thereof, provided,
however, that the defence shall be through legal counsel acceptable to the
Indemnified Party, acting reasonably. In addition, the Indemnified Party shall
also have the right to employ separate counsel in any such action and
participate in the defence thereof, and the fees and expenses of such counsel
shall be borne by the Indemnified Party if:


 


(a)                                  the employment thereof has been specifically authorized in writing
by the Company;


 


(b)                                 the Indemnified Party has been advised by counsel, acting
reasonably, in a written opinion setting out the reasons therefor, that representation
of the Company and the Indemnified Party by the same counsel would be
inappropriate due to actual or potential differing interests between them; or


 


(c)                                  the Company has failed within a reasonable time after receipt of
such written notice to assume the defense of such action or claim;


 


provided that the Company shall not be
required to assume the fees and expenses of more than one additional counsel to
the Indemnified Party. Neither party shall effect any settlement of any such
action or claim or make any admission of liability or fact without the written
consent of the other party, such consent to be promptly considered and not to
be unreasonably withheld. The indemnity hereby provided for shall remain in
full force and effect and shall not be limited to or affected by any other
indemnity in respect of any matters specified herein obtained by the
Indemnified Party from any other person.


 


9.3                                 To the extent that any Indemnified Party is not a party to this
agreement, the Agent shall obtain and hold the right and benefit of the
indemnity provisions hereof in trust for and on behalf of


 


25

















 


such Indemnified Party, entitled to enforce
such provisions for its benefit and on behalf of such Indemnified Party.


 


10.                               Contribution


 


10.1                           In the event that the indemnity provided for above is, for any
reason, illegal or unenforceable as being contrary to public policy or for any
other reason, the Agent and the Company shall contribute to the aggregate of
all losses, claims, costs, damages, expenses or liabilities (including any
legal or other expenses reasonably incurred by the Indemnified Party) of the
nature provided for above such that the Agent shall be responsible for that
portion represented by the percentage that the portion of the Agency Fee paid
by the Company to the Agent bears to the gross proceeds realized from the sale
of the Convertible Notes, and the Company shall be responsible for the balance,
provided that, in no event, shall the Agent be responsible for any amount in
excess of the amount of the Agency Fee actually received by the Agent. In the
event that the Company may be held to be entitled to contribution from the
Agent under the provisions of any statute or law, the Company shall be limited
to contribution in an amount not exceeding the lesser of: (i) the portion of
the full amount of losses, claims, costs, damages, expenses and liabilities,
giving rise to such contribution for which the Agent is responsible, as
determined above, and (ii) the amount of the Agency Fee actually received by
the Agent. Notwithstanding the foregoing, a party guilty of fraudulent
misrepresentation shall not be entitled to contribution from the other party.
Any party entitled to contribution will, promptly after receiving notice of
commencement of any claim, action, suit or proceeding against such party in
respect of which a claim for contribution may be made against the other party
under this section, notify such party from whom contribution may be sought. In
no case shall such party from whom contribution may be sought be liable under
this agreement unless such notice has been provided, but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it may have otherwise than under this section,
except to the extent that such failure to notify jeopardizes the legal position
of the party from whom contribution may be sought. The right to contribution
provided in this section shall be in addition to, and not in derogation
of, any other right to contribution which the Agent or the Company may have by
statute or otherwise by law.


 


10.2                           The Company waives its right to recover contribution from the Agent
or any other Indemnified Party with respect to any liability of the Company
solely by reason of or arising out of any misrepresentation contained in the
Company’s Information Record, other than a misrepresentation included in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Agent specifically for use therein.


 


11.                               Expenses


 


11.1                           Whether or not the Offering is completed, all expenses incurred from
time to time in connection with the Offering (including the Agent’s reasonable
out-of-pocket expenses which include those expenses incurred in connection with
due diligence and marketing meetings) and the reasonable fees and disbursements
of the Agent’s legal counsel (up to a maximum of $40,000, exclusive of
disbursements) or incidental to the Offering and all matters in connection with
the transactions herein, including the costs and filing fees with respect to
the private placement of the Convertible Notes, costs associated with the
listing and posting for trading on the Exchange of the


 


26

















 


Unit Shares, the Warrant Shares, the
Compensation Unit Shares and Compensation Warrant Shares, the cost of the
registration and delivery of the Convertible Notes, Unit Shares, Warrant
Certificates, Warrant Shares, the Compensation Option Certificates and the
Underlying Compensation Securities and the fees and expenses of each of the
Company’s auditors, counsel and local counsel shall be borne by the
Company.  Subject to the foregoing, the
Company shall also be responsible for any exigible Goods and Services Tax on
the foregoing amounts. The Company covenants and agrees to fully reimburse the
Agent from time to time for all such expenses within 5 business days from the
receipt of one or more invoices.


 


12.                               Right of First Refusal


 


12.1                           Subject to meeting or exceeding the thresholds set out under
Section 12.2 below, the Company hereby grants the Agent the right of first
refusal to provide, for a period from completion of the Offering set out in
Section 12.2 below, the following services to the Company and its
Subsidiaries, if such services are required by the Company or the Subsidiaries:


 


(a)                                  services as lead manager or lead underwriter for all equity
financings (whether private or public) conducted in Canada (and whether or not
such financing is conducted entirely in Canada or is the Canadian portion of a
financing that is also conducted in the United States or elsewhere); and


 


(b)                                 services as lead manager or lead underwriter for the Canadian
tranche of any foreign-led equity financing.


 


12.2                           The period under which the Agent will have the right of first
refusal will be:


 


(a)                                  one year if the aggregate gross proceeds raised in the Offering (the
“Gross Proceeds”), other than those allocable to Protected List Purchases, are
at least $1,000,000 but less than $2,000,000; and


 


(b)                                 two years if the Gross Proceeds, other than those allocable to
Protected List Purchases, are at least $2,000,000.


 


12.3                           The rights of the Agent referred to in Section 12.1 hereof must
be exercised by the Agent within a reasonable period of time, and in any event
not later than the tenth Business Day after the Agent has been provided with
written notice from the Company that such services are required, which notice
shall set out, in reasonably sufficient detail, the services required and the
proposed terms of such services.  If the
Agent does not exercise such rights, the Company may retain a third party to
provide such services but not on more favourable terms than those which were
offered to the Agent.  Any more
favourable terms of such services must first be offered to the Agent before
being offered to a third party. 
Further, if the Company engages the Agent pursuant to the provisions
described in Section 12.1 hereof, or if the Agent is required to execute
any documents relating to an offering, the Company and the Agent, as the case
may be, shall enter into one or more agreements with respect to such events in
a form satisfactory to the Company and the Agent, acting reasonably.


 


27

















 


13.                               Survival of Warranties, Representations, Covenants and Agreements


 


13.1                           All warranties, representations, covenants and agreements of the
Company herein contained or contained in documents submitted or required to be
submitted pursuant to this agreement shall survive the purchase by the
Purchasers of the Convertible Notes and shall continue in full force and effect
(with respect to representations and warranties, as to their truth and accuracy
as at the Time of Closing) for the benefit of the Purchasers for a period
ending on the Survival Limitation Date.


 


14.                               General Contract Provisions


 


14.1                           Any notice or other communication to be given hereunder shall be in
writing and shall be given by delivery or by telecopier, as follows:


 


if
to the Company:


 


ADB Systems International Ltd.

6725 Airport Road, Suite 201

Mississauga, Ontario  L4V 1V2


 


Attention:                 Jeffrey
Lymburner

Telecopier Number:                (905) 672-7514


 


with
a copy (which will not constitute notice) to:


 


Gowling Lafleur Henderson LLP

40 King Street West

Scotia Plaza, Suite 5800

Toronto, Ontario  M5H 3Z7


 


Attention:                 Jason
A. Saltzman

Telecopier Number:                (416) 863-3479


 


or
if to the Agent:


 


First Associates Investments Inc.

BCE Place 

900 – 181 Bay Street

Toronto, Ontario  M5J 2T3


 


Attention:                 Howard
Katz

Telecopier Number:                (416) 864-9151


 


with
a copy (which will note constitute notice) to:


 


Goodman and Carr LLP

200 King Street West, Suite 2300

Toronto, Ontario M5H 3W5


 


28

















 


Attention:                 Gary
M. Litwack

Telecopier Number:                (416) 595-0567


 


and if so given, shall be deemed to have been
given and received upon receipt by the addressee or a responsible officer of
the addressee if delivered, or four hours after being telecopied and receipt
confirmed during normal business hours, as the case may be. Any party may, at
any time, give notice in writing to the others in the manner provided for above
of any change of address or telecopier number.


 


14.2                           This agreement constitutes the entire agreement between the Agent
and the Company relating to the subject matter hereof and supersedes all prior
agreements between the Agent and the Company with respect to their respective
rights and obligations in respect of the Offering.


 


14.3                           Time shall be of the essence of this agreement and of every part
hereof and no extension or variation of this agreement shall operate as a
waiver of this provision.


 


14.4                           The parties hereto covenant and agree to sign such other documents,
do and perform and cause to be done and performed such further and other acts
and things as may be necessary or desirable in order to give full effect to
this agreement and every provision of it.


 


14.5                           Other than as otherwise provided herein, no party to this agreement
may assign this agreement, any part hereof or its rights hereunder without the
prior written consent of the other party. 
Subject to the foregoing, this agreement shall enure to the benefit of
and be binding upon the parties hereto and their respective successors and permitted
assigns.


 


14.6                           In the event that any provision or part of this agreement shall be
deemed void or invalid by a court of competent jurisdiction, the remaining
provisions or parts shall be and remain in full force and effect. If, in any
judicial proceeding, any provision of this agreement is found to be so broad as
to be unenforceable, it is hereby agreed that such provision shall be
interpreted to be only so broad as to be enforceable.


 


14.7                           This agreement may be executed by telecopier and in one or more
counterparts which, together, shall constitute an original copy hereof as of
the date first noted above.


 


If this agreement accurately reflects the
terms of the transaction which we are to enter into and if such terms are
agreed to by the Company, please communicate your acceptance by executing where
indicated below and returning by telecopier one copy and returning by courier
one originally executed copy to the Agent (Attention: Howard  Katz).


 


29

















 


Yours very truly,


 


 


	
  FIRST ASSOCIATES INVESTMENTS INC.

  	
   

  
	
   

  
	
   

  
	
  Per:

  	
   

  	
   

  
	
   

  	
  Patrick Leung

  
	
   

  	
  Director, Investment Banking

  
				



 


 


The foregoing accurately reflects the terms
of the transaction which we are to enter into and such terms are agreed to and
with effect as of the date first above written.


 


	
  ADB SYSTEMS INTERNATIONAL LTD.

  	
   

  
	
   

  	
   

  
	
   

  
	
  Per:

  	
   

  	
   

  
	
   

  	
  Mike Robb

  
	
   

  	
  Chief Financial Officer

  
				



 


30

















 


SCHEDULE “A”


 


ADB SYSTEMS INTERNATIONAL LTD.


 


This
is Schedule “A” to the Agency Agreement between ADB Systems International
Ltd. and First Associates Investments Inc. made as of June 15, 2004.


 


	
  Issue:

  	
   

  	
  Up to $5,000,000 principal amount of
  Convertible Notes, to be issued by way of private placement exemptions from
  prospectus and registration requirements, subject to the receipt of any applicable
  regulatory and stock exchange approvals.

  
	
   

  	
   

  	
   

  
	
  Issue Price:

  	
   

  	
  The Convertible Notes will be issued at par
  in integral multiples of $1,000.

  
	
   

  	
   

  	
   

  
	
  Convertible Notes:

  	
   

  	
  The Convertible Notes will have the
  following material terms:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
  The Convertible Notes will bear interest
  at an annual rate of 7% of the principal amount of the Convertible Notes
  outstanding from time to time, payable on the earlier of the conversion of
  the Convertible Notes or the Maturity Date (as defined below).  Interest will continue to accrue until
  paid;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  The Convertible Notes will mature and be
  payable on the date that is the third anniversary of the Closing Date (the
  “Maturity Date”)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
  At any time up to and including the
  Maturity Date, all or any portion of the principal amount of the Convertible
  Notes outstanding from time to time will be convertible, at the option of the
  holder, provided that the holder complies with the notice provisions
  therefor, into units of securities of the Company (“Units”) at a conversion
  price of $0.31 per Unit (the “Conversion Price”), subject to adjustments for
  stock splits, consolidations, other capital reorganizations, extraordinary
  dividends or distributions;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Each Unit will consist of one common
  share in the capital of ADB (a “Common Share”) and one-half of one Common
  Share purchase warrant (a “Warrant”). 
  Each whole Warrant will entitle the holder to acquire one Common Share
  at an exercise price of $0.50 per share, and will be exercisable at any time
  prior to the fourth anniversary of the Closing Date; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

  	
  In the event that at any time from and
  after the first anniversary of the Closing Date the volume weighted average
  trading price of the Common Shares through its principal trading market for a
  20 consecutive trading day period is $0.70 or more, all then outstanding
  Convertible Notes, including any accrued interest thereon, will be
  automatically converted into Units at the Conversion Price.

  
	
   

  	
   

  	
   

  
	
  Use of Proceeds:

  	
   

  	
  For working capital and general corporate
  purposes.

  
	
   

  	
   

  	
   

  
	
  Security:

  	
   

  	
  The Convertible Notes will provide general
  security over the Corporation’s assets.

  



 


31

















 


	
   

  	
   

  	
  Such security will be subordinate
  liabilities of the Corporation to current secured creditors.

  
	
   

  	
   

  	
   

  
	
  Listing:

  	
   

  	
  The Common Share component of the Units
  (and the Common Shares issuable upon exercise of the Warrants) will be listed
  on the TSX.

  
	
   

  	
   

  	
   

  
	
  Commission:

  	
   

  	
  8% of the gross proceeds of the
  Offering.  In addition, the Agent will
  receive an option, exercisable until the second anniversary of the Closing
  Date, to purchase that number of Units as is equal to 10% of the Units
  issuable upon full conversion of the Convertible Notes sold under the
  Offering, at an exercise price equal to the Conversion Price.

  
	
   

  	
   

  	
   

  
	
  Closing Date:

  	
   

  	
  On or about June 15, 2004.  The Offering may be completed through one
  or more closings.

  
	
   

  	
   

  	
   

  
	
  Closing Time:

  	
   

  	
  2:00 p.m. (Toronto
  time) on the Closing Date.

  



 


32

















 


APPENDIX I



SPECIAL COVENANT


 


TO:                            The Agent (as such term is defined in the above agreement)


 


Terms used below shall have the meaning
ascribed thereto in the above agreement.


 


The undersigned severally covenant and agree
that they will not, directly or indirectly offer, issue, sell, contract to
sell, announce an intention to sell, sell any option or contract to purchase,
purchase any option or contract to sell any Common Shares or financial
instruments convertible or exchangeable into Common Shares (other than for the
issuance of options under the Company’s existing option plan and securities
issued in connection with an arms’ length acquisition, merger, consolidation or
amalgamation with any one or more corporations or for the issuance of Common
Shares pursuant to any purchase warrants or Compensation Options existing on
the date hereof) for a period ending 180 days after the Closing Date without
the prior written consent of the Agent, such consent not to be unreasonably
withheld.


 


This special covenant may be signed by the directors
and officers in as may counterparts as may be necessary, originally or by
telecopier facsimile signature, each of which so signed shall be deemed to be
an original, and such counterparts together shall constitute one and the same
instrument and notwithstanding the date of execution shall be deemed to bear
the date first written below.


 


Dated as of the
           day of June, 2004.


 


 


	
   

  	
   

  	
   

  	
   

  
	
    •

  	
   

  	
    •

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
    •

  	
   

  	
    •

  	
   

  



 


33

















 


SCHEDULE “B”


 


DETAILS AS TO THE SUBSIDIARIES OF THE COMPANY


 


This
is Schedule “B” to the Agency Agreement between ADB Systems International
Ltd. and First Associates Investments Inc. made as of June 15, 2004.


 


	
  Name
  of Subsidiary

  	
   

  	
  Country
  of Incorporation

  	
   

  	
  Ownership
  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ADB Systemer AS

  	
   

  	
  Norway

  	
   

  	
  99.4

  	
  %

  
	
  ADB Systems International Limited

  	
   

  	
  Ireland

  	
   

  	
  100

  	
  %

  
	
  ADB Systems Limited

  	
   

  	
  England

  	
   

  	
  100

  	
  %

  
	
  Bid.Com (U.K.) Limited

  	
   

  	
  England

  	
   

  	
  100

  	
  %

  
	
  ADB Systems, Inc.

  	
   

  	
  USA (Delaware)

  	
   

  	
  100

  	
  %

  
	
  Bid.Com USA, Inc.

  	
   

  	
  USA (Florida)

  	
   

  	
  100

  	
  %

  
	
  Bid.Com International Inc.

  	
   

  	
  Canada (Ontario)

  	
   

  	
  100

  	
  %

  
	
  Bid.Com International Pty. Ltd.

  	
   

  	
  Australia

  	
   

  	
  100

  	
  %

  
	
  Internet Liquidators USA, Inc.

  	
   

  	
  USA (Florida)

  	
   

  	
  100

  	
  %

  
	
  ADB Systems USA, Inc.

  	
   

  	
  USA (Delaware)

  	
   

  	
  100

  	
  %

  
	
  GE Asset Manager LLC

  	
   

  	
  USA (Delaware)

  	
   

  	
  50

  	
  %

  



 


34

















 


SCHEDULE “C”


 


DETAILS AS TO THE OUTSTANDING CONVERTIBLE SECURITIES


 


This
is Schedule “C” to the Agency Agreement between ADB Systems International
Ltd. and First Associates Investments Inc. made as of June 15, 2004.


 


Secured
Convertible Debt:


 


	
  Series

  Number

  	
   

  	
  Lender

  	
   

  	
  Principal

  Outstanding

  	
   

  	
  Maturity

  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D2

  	
   

  	
  Chris Bulger

  	
   

  	
  $

  	
  20,000

  	
   

  	
  31-Dec-04

  	
   

  
	
  D7

  	
   

  	
  Jeff Lymburner

  	
   

  	
  20,250

  	
   

  	
  31-Dec-04

  	
   

  
	
  D11

  	
   

  	
  Kenneth and Kelly Sparfel

  	
   

  	
  20,000

  	
   

  	
  31-Dec-04

  	
   

  
	
   

  	
   

  	
  Total Series D

  	
   

  	
  60,250

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E2

  	
   

  	
  Greenwich Growth Fund

  	
   

  	
  75,000

  	
   

  	
  19-Aug-06

  	
   

  
	
  E3

  	
   

  	
  Janet Harop

  	
   

  	
  25,000

  	
   

  	
  19-Aug-06

  	
   

  
	
  E4

  	
   

  	
  Christopher Harop

  	
   

  	
  50,000

  	
   

  	
  19-Aug-06

  	
   

  
	
  E5

  	
   

  	
  Mike Robb

  	
   

  	
  15,000

  	
   

  	
  19-Aug-06

  	
   

  
	
  E6

  	
   

  	
  Jim Moskos

  	
   

  	
  35,000

  	
   

  	
  19-Aug-06

  	
   

  
	
  E7

  	
   

  	
  Paul Godin

  	
   

  	
  50,000

  	
   

  	
  19-Aug-06

  	
   

  
	
  E8

  	
   

  	
  Arne Hellesto

  	
   

  	
  200,000

  	
   

  	
  19-Aug-06

  	
   

  
	
   

  	
   

  	
  Total Series E

  	
   

  	
  600,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F

  	
   

  	
  Stonestreet Limited
  Partnership

  	
   

  	
  500,000

  	
   

  	
  19-May-07

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total Convertible Debt
  Outstanding

  	
   

  	
  $

  	
  1,010,250

  	
   

  	
   

  	
   

  



 


Options:


 


As of June 11, 2004 there
are 2,156,707 options issued to employees, directors and third parties that can
be converted into common shares.


 


35

















 


Warrants:


 


	
  Holder

  	
   

  	
  Warrant Number

  	
   

  	
  Date Issued

  	
   

  	
  Expiry Date

  	
   

  	
  Number Issued

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GE Capital

  	
   

  	
  GE-02-1

  	
   

  	
  13-Dec-02

  	
   

  	
  5-Jan-05

  	
   

  	
  250,000

  	
   

  
	
  GE Capital

  	
   

  	
  GE-02-2

  	
   

  	
  13-Dec-02

  	
   

  	
  5-Jan-05

  	
   

  	
  1,000,000

  	
   

  
	
  GE Capital

  	
   

  	
  GE-02-3

  	
   

  	
  13-Dec-02

  	
   

  	
  5-Jan-05

  	
   

  	
  750,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stonestreet Associate

  	
   

  	
  2002-1

  	
   

  	
  25-Apr-02

  	
   

  	
  25-Apr-05

  	
   

  	
  50,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C. Bulger

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  31-Dec-04

  	
   

  	
  83,333

  	
   

  
	
  C. Dawson

  	
   

  	
  W-D-9

  	
   

  	
  21-Feb-03

  	
   

  	
  31-Dec-04

  	
   

  	
  104,167

  	
   

  
	
  M. & A. Lai

  	
   

  	
  W-D-11

  	
   

  	
  21-Feb-03

  	
   

  	
  31-Dec-04

  	
   

  	
  104,167

  	
   

  
	
  Lai Children’s Trust

  	
   

  	
  W-D-10

  	
   

  	
  21-Feb-03

  	
   

  	
  31-Dec-04

  	
   

  	
  104,167

  	
   

  
	
  R. Lymburner

  	
   

  	
  W-D-7A

  	
   

  	
  To be issued

  	
   

  	
  31-Dec-04

  	
   

  	
  84,375

  	
   

  
	
  A. Rowsome

  	
   

  	
  W-D-8

  	
   

  	
  3-Feb-03

  	
   

  	
  31-Dec-04

  	
   

  	
  62,500

  	
   

  
	
  K. & K. Sparfel

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  31-Dec-04

  	
   

  	
  83,333

  	
   

  
	
  Stonestreet Associate

  	
   

  	
  W-02-01

  	
   

  	
  30-Aug-02

  	
   

  	
  31-Dec-04

  	
   

  	
  150,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  776,043

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H. Schweizer

  	
   

  	
  03-01

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  150,000

  	
   

  
	
  A. Hellesto

  	
   

  	
  03-02

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  416,667

  	
   

  
	
  F. Jung

  	
   

  	
  03-03

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  100,000

  	
   

  
	
  K. MacDonald

  	
   

  	
  03-04

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  100,000

  	
   

  
	
  V. Konidis

  	
   

  	
  03-05

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  100,000

  	
   

  
	
  P.Bacasalmasi

  	
   

  	
  03-06

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  100,000

  	
   

  
	
  K. Prasad

  	
   

  	
  03-07

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  322,916

  	
   

  
	
  Growlings Canada Inc.

  	
   

  	
  03-08

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  693,092

  	
   

  
	
  B. Piva

  	
   

  	
  03-09

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  83,333

  	
   

  
	
  Greenwhich Growth Fund

  	
   

  	
  03-10

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  250,000

  	
   

  
	
  Strategy Capital Corp.

  	
   

  	
  03-11

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  104,167

  	
   

  
	
  K. & K. Sparfel

  	
   

  	
  03-12

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  83,333

  	
   

  
	
  C. Cimicata

  	
   

  	
  03-13

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  208,333

  	
   

  
	
  J. Racanelli

  	
   

  	
  03-14

  	
   

  	
  26-Jun-03

  	
   

  	
  26-Jun-05

  	
   

  	
  20,833

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2,732,674

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stonestreet

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  19-Aug-06

  	
   

  	
  785,714

  	
   

  
	
  Greenwich Growth Fund

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  19-Aug-06

  	
   

  	
  107,143

  	
   

  
	
  J. Harrop

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  19-Aug-06

  	
   

  	
  35,714

  	
   

  
	
  C. Harrop

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  19-Aug-06

  	
   

  	
  71,429

  	
   

  
	
  M. Robb

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  19-Aug-06

  	
   

  	
  21,429

  	
   

  
	
  P. Godin

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  19-Aug-06

  	
   

  	
  71,429

  	
   

  
	
  J. Moskos

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  19-Aug-06

  	
   

  	
  50,000

  	
   

  
	
  A. Helesto

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  19-Aug-06

  	
   

  	
  285,714

  	
   

  
	
  Stonestreet Associate

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  19-Aug-06

  	
   

  	
  30,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1,458,571

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stonestreet

  	
   

  	
  Not applicable

  	
   

  	
  To be issued

  	
   

  	
  19-May-07

  	
   

  	
  806,452

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  806,452

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  GRAND TOTAL

  	
   

  	
   

  	
   

  	
  7,823,740

  	
   

  



 


36

















 


SCHEDULE “D”


 


DETAILS AS TO THE INTELLECTUAL PROPERTY


 


This
is Schedule “D” to the Agency Agreement between ADB Systems International
Ltd. and First Associates Investments Inc. made as of June 15, 2004.


 


PART
I – OWNED INTELLECTUAL PROPERTY


 


ADB has established Intellectual Property and
Intellectual Property Rights through its software development activities and
creation of on-line transaction processes.


 


Overview of software products


 


ADB Systems has developed an integrated
series of software applications designed for asset lifecycle management.  These software applications include:


 


•                                          Dyn@mic Buyer, an on-line solution that helps organizations automate
their tendering activities (e.g. reverse auctions, request for
quotations/proposals) and reduce procurement costs.


 


•                                          ProcureMate, a web-based solution that allows organization to
streamline the purchasing of maintenance, repairs and operating (MRO) supplies
while reducing procurement costs.


 


•                                          WorkMate, a comprehensive enterprise asset management solution that
allows organizations to automate and integrate maintenance management,
materials management and procurement activities.


 


•                                          Dyn@mic Seller, a web-based sales solution that enables
organizations to manage inventory and reduce surplus through the use of on-line
auctions.


 


Overview of patents


 


ADB has also registered a number of patents,
(issued and pending), with U.S. Patent Office relating to its on-line
transaction processes.  These patents
include:


 


37

















 


PATENT PORTFOLIO SUMMARY
(Updated
June 4, 2004)


 


	
  FILING

  DATE

  	
   

  	
  TYPE

  	
   

  	
  SERIAL

  NO.

  	
   

  	
  OUR
  FILE

  	
   

  	
  TITLE

  (INVENTORS)

  	
   

  	
  STATUS

  
	
  July 11, 1996

  	
   

  	
  CDN patent appln

  	
   

  	
  2,180,995

  	
   

  	
  08-886238CA

  	
   

  	
  Computer Auction System

  (GODIN, Paul B.;

  LYMBURNER, Jeffrey)

  	
   

  	
  Filed Reinstatement and Response to outstanding
  Office Action – December 18, 2003

  
	
  August 26, 1996

  	
   

  	
  US patent appln

  	
   

  	
  5,890,138

  	
   

  	
  08-886238US

  	
   

  	
  Computer Auction System

  (GODIN, Paul B.;

  LYMBURNER, Jeffrey)`

  	
   

  	
  Issued – March 30, 1999

  
	
  March 9, 1999

  	
   

  	
  US patent appln

  (Divisional)

  	
   

  	
  6,266,652 B1 claimed priority from
  5,890,138

  	
   

  	
  08-886238US1

  	
   

  	
  Computer Auction System

  (GODIN, Paul B.;

  LYMBURNER, Jeffrey)

  	
   

  	
  Issued – July 24, 2001

  
	
  February 22, 2001

  	
   

  	
  US patent appln

  (continuation)

  	
   

  	
  09/789,636

  	
   

  	
  08-886238US2

  	
   

  	
  Computer Auction System

  (GODIN, Paul B.;

  LYMBURNER, Jeffrey`

  	
   

  	
  Abandoned on Instruction  May 17, 2002

  



 


Overview of Trade Names and
Trademarks


 


Trademarks or
trade names which the Company owns include ADBTM; PROCUREMATETM; WORKMATETM; BID
BUDDYTM; SEARCH BUDDYTM: DYNAMIC BUYERTM and DYNAMIC SELLERTM.


 


PART
II – LICENSED INTELLECTUAL PROPERTY


 


Dyn@mic
Buyer Technology Components


 


Dynamic Buyer was constructed on the
Microsoft .Net platform and used the MS-SQL database engine. The related core
IP includes XML parsers and translation components, user abstraction layers and
specialized component factories.


 


Dyn@mic
Seller Technology Components


 


Dynamic Seller was developed using the
Microsoft COM+ and D-Com architectures and technologies. It utilizes MS-SQL as
its database. The related core IP includes XML parsers and translation
components, user abstraction layers and specialized component factories.


 


WorkMate
Technology Components


 


The Workmate application is constructed using
the Powerbuilder suite of development tools and using Oracle as the
multi-platform database engine. The related IP includes integration engines,
component class libraries and specialized OLAP reporting engines.


 


38

















 


ProcureMate
Technology components


 


Procuremate was created using the Microsoft
Visual Studio suite of development tools. It utilizes Oracle as the
multi-platform database engine. The related core IP includes XML parsers and
translation components, user abstraction layers, Web Integration Engines and
components, as well as specialized component factories.


 


PART
III – RIGHTS GRANTED IN OWNED INTELLECTUAL PROPERTY


 


Patent License Agreement between NCR
Corporation and ADB Systems International Inc. dated April 17, 2001.


 


ADB Systems International Inc. and the Brick
– Loan Transaction Documents.


 


ADB License Agreement for Dynamic Buyer and
Dynamic Seller between ADB Systems USA, Inc. and GE Asset Manager, LLC forming
part of the Amended and Restated Operating Agreement between General Electric
Capital Corporation and ADB Systems USA, Inc.


 


39

















 


SCHEDULE “E”


 


TERMS FOR SALES TO U.S. PERSONS


 


This
is Schedule “E” to the Agency Agreement between ADB Systems International
Ltd. and First Associates Investments Inc. made as of June 15, 2004.


 


See attached.


 


40

















 


SCHEDULE “F”


 


PERMITTED ENCUMBRANCES


 


“Permitted Security Interests” means with respect to any property or asset of any Person:


 


(a)                                  security interests for
provincial or municipal taxes, charges, rates and assessments not yet due or,
if due, the validity of which is being contested in good faith and security
interests for the excess of the amount of any past due taxes for which a final
assessment has not been received over the amount of such taxes as estimated and
paid by such Person;


 


(b)                                 the security interests of any
judgement rendered or claim filed against the Corporation or its property which
it shall be contesting in good faith and in respect of which there shall have
been deposited with an arms-length Person acceptable to the Registered Holder,
acting reasonably, cash, security or a surety bond satisfactory to such
arms-length Person in an amount sufficient to pay such judgement or claim;


 


(c)                                  defects or irregularities of
title which do not in the aggregate materially impair the value of the property
to which they related or interfere with the use of the property to which they
relate for the purposes for which it is held by such Person;


 


(d)                                 pledges or deposits to secure
payment of workers’ compensation, good faith deposits in connection with
tenders, contracts (other than contracts for the repayment of moneys borrowed)
or leases, deposits to secure public or statutory obligations, deposits to
secure or in lieu of surety or appeal bonds, and pledges or deposits for
similar purposes in the ordinary course of business;


 


(e)                                  purchase money security
interests;


 


(f)                                    security interests granted by
the Corporation to secure indebtedness of the Corporation to any of the Holders
of the Notes;


 


(g)                                 the security interests
perfected by the registrations made under the PPSA and listed below; and


 


(h)                                 any other security interests
accepted from time to time by the Holders of Notes representing a majority of
the aggregate principal amounts then outstanding under all Notes in writing.


 


For the purposes of this Schedule “F”,
the term “security interests” means any mortgage, charge, pledge,
hypothecation, lien (statutory or otherwise), assignment, finance lease, title
retention agreement or arrangement, security interest or other encumbrance or
adverse claim of any nature, or any other security agreement or arrangement
creating in favour of any creditor a right in respect of a particular property
or asset.


 


41

















 


Permitted PPSA Registrations


 


	
  File Number:

  	
   

  	
  084987306

  
	
  Registration Number:

  	
   

  	
  20021104151100439461

  
	
   

  	
   

  	
  20021108165217583169

  
	
   

  	
   

  	
  20030826182015316880

  
	
   

  	
   

  	
  20040527145115302544

  
	
   

  	
   

  	
   

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International Ltd.

  
	
  Secured Party:

  	
   

  	
  Jeff Lymburner

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  888880464

  
	
  Registration Number:

  	
   

  	
  20021104144390654204

  
	
   

  	
   

  	
  20021108165217583161

  
	
   

  	
   

  	
  20030826182015316881

  
	
   

  	
   

  	
  20040527145115302545

  
	
   

  	
   

  	
   

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International Ltd.

  
	
  Secured Party:

  	
   

  	
  Christopher Bulger

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  888880518

  
	
  Registration Number:

  	
   

  	
  20021104144390654209

  
	
   

  	
   

  	
  20021108165217583166

  
	
   

  	
   

  	
  20031021145615300346

  
	
   

  	
   

  	
  20040527145115302546

  
	
   

  	
   

  	
   

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International Ltd.

  
	
  Secured Party:

  	
   

  	
  Kenneth Sparfel, Kelly
  Sparfel

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  881960004

  
	
  Registration Number:

  	
   

  	
  20020510181117159588

  
	
   

  	
   

  	
  20030826092017152348

  
	
   

  	
   

  	
   

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International Inc.

  
	
  Secured Party:

  	
   

  	
  Xerox Canada Ltd.

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897234246

  
	
  Registration Number:

  	
   

  	
  20030812145215303748

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International
  Ltd.

  
	
  Secured Party:

  	
   

  	
  Stonestreet Limited
  Partnership

  



 


42

















 


	
  File Number:

  	
   

  	
  897234255

  
	
  Registration Number:

  	
   

  	
  20030812145215303749

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International
  Ltd.

  
	
  Secured Party:

  	
   

  	
  Greenwich Growth Fund Ltd.

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897592122

  
	
  Registration Number:

  	
   

  	
  20030825184115313987

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International
  Ltd.

  
	
  Secured Party:

  	
   

  	
  Canaccord Capital Corp.

  
	
   

  	
   

  	
  ITF Janet Harrop A/C 133388S7

  
	
  Description:

  	
   

  	
  General Security Agreement

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897592131

  
	
  Registration Number:

  	
   

  	
  20030825184115313988

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International Ltd.

  
	
  Secured Party:

  	
   

  	
  Canaccord Capital Corp.

  
	
   

  	
   

  	
  ITF Christopher Harrop A/C
  133384S6

  
	
  Description:

  	
   

  	
  General Security Agreement

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897592149

  
	
  Registration Number:

  	
   

  	
  20030825184115313989

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International
  Ltd.

  
	
  Secured Party:

  	
   

  	
  Robb, Michael

  
	
  Description:

  	
   

  	
  General Security Agreement

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897592158

  
	
  Registration Number:

  	
   

  	
  20030825184115313990

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International
  Ltd.

  
	
  Secured Party:

  	
   

  	
  Mokos, James

  
	
  Description:

  	
   

  	
  General Security Agreement

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897592167

  
	
  Registration Number:

  	
   

  	
  20030825184115313991

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International
  Ltd.

  
	
  Secured Party:

  	
   

  	
  Gundyco ITF Paul Godin RRSP
  A/C 59121001-11

  
	
  Description:

  	
   

  	
  General Security Agreement

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897592176

  
	
  Registration Number:

  	
   

  	
  20030825184115313992

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International
  Ltd.

  
	
  Secured Party:

  	
   

  	
  Hellesto, Arne

  



 


43

















 


	
  Description:

  	
   

  	
  General Security Agreement

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  605431161

  
	
  Registration Number:

  	
   

  	
  20040512170314627442

  
	
  Debtor Name:

  	
   

  	
  ADB Systems International
  Ltd.

  
	
  Secured Party:

  	
   

  	
  Stonestreet Limited
  Partnership

  
	
  Description:

  	
   

  	
  General Security Agreement
  with respect to $500,000 Principal Series F of secured convertible note
  issued by debtor to secured party, but which is to rank pari passu with the Permitted Security Interests, except in
  respect of (i) the Company’s world-wide account receivables
  and all proceeds therefrom; and (ii) the proceeds from the account
  receivables insurance policy No. GG1-27888 issued by Export Development
  Canada and St. Paul Guarantee Insurance Company, insuring 90% of value of the
  Receivables, for which the security interest of Stonestreet
  Limited Partnership referred to above is to rank in priority pursuant
  to a priority agreement dated June 15, 2004 by Stonestreet Limited
  Partnership and the Company in favour of the Holders of the Notes.

  



 


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